Trump Threatens Tariffs on Canadian-Made Cars

US President Donald Trump said on Friday that the United States and Mexico were making progress on a trade deal, and warned Canada he would tax their auto exports if an agreement can not be reached with Ottawa.

US President Donald Trump speaks to reporters after signing a proclamation declaring his intention to withdraw from the JCPOA Iran nuclear agreement in the Diplomatic Room at the White House in Washington, U.S. May 8, 2018.

Two American sources who have received briefings on the talks - but are not authorized to talk about what they know on the record - confirmed Thursday there seems to be progress on key American demands about what goes into cars that enter the US duty free under NAFTA.

The United States has sought tougher rules on what percentage of a vehicle's components need to be built in the NAFTA region to avoid tariffs, as well as demanding that a certain number of cars and trucks be made in factories paying at least US$16 an hour.

It is still unclear when Canada will return to the table.

"We're glad Mexico and the USA continue to work out their bilateral issues".

Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, who is leading NAFTA trade talks for Canada, said the minister was in regular contact with her Mexican and US counterparts.

A source familiar with the negotiations said that Canada will definitely not take part when the talks resume next Wednesday.

However, he acknowledged: "We still have a lot of work to do". Current sessions have mostly focused on resolving U.S.

Mexican President-elect Andres Manuel Lopez Obrador has earlier talked of a "new relationship" with the United States. On his way out of the meeting, reports said Guajardo indicated the two sides have made progress and will meet again next week to continue their talks for a fourth straight week.

Mexico has repeatedly said it opposed to including such a clause. "And the answer is no, as long as the US and Mexico have not resolved their issues, specifically auto".

Industry officials also said the US team had barely moved from its demands last May of a 75 percent overall regional content threshold with 40-45 percent content from high-wage zones - effectively the United States and Canada - with the only substantial change a slightly longer phase-in time.

The source added that Freeland and David MacNaughton, Canada's ambassador to the US, remain in regular contact with relevant officials from the USA and Mexico. -Mexican issues were resolved, Canada could rejoin the talks to work on tri-lateral issues.